Summary of how loans have changed for medical students?

[deleted307836]

Hey all,

There's a lot of information about this scattered throughout the forums, and I'm finding it difficult to find a succinct summary of what is different with loans for medical students now than, say, 10 years ago. All I really know is that rates are higher at 6.8% now compared to around half that before. Anyone have any links to posts that have covered this, or good websites with this info? I feel like DrMidlife has posted very good info about this at some point but I haven't been able to find much.

I'm trying to find information to help me organize a discussion about this with other students with an emphasis on changes for students entering medical school now, and what may be different from what those now graduating residency dealt with.

Thanks for any help!

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[Igor4sugry]

Hey all,

There's a lot of information about this scattered throughout the forums, and I'm finding it difficult to find a succinct summary of what is different with loans for medical students now than, say, 10 years ago. All I really know is that rates are higher at 6.8% now compared to around half that before. Anyone have any links to posts that have covered this, or good websites with this info? I feel like DrMidlife has posted very good info about this at some point but I haven't been able to find much.

I'm trying to find information to help me organize a discussion about this with other students with an emphasis on changes for students entering medical school now, and what may be different from what those now graduating residency dealt with.

Thanks for any help!

Basic Changes:
1. Subsidized stafford loans are gone.
2. Interest rate is fixed at 6.8% (has been for past 3yrs).
3. Tuition is high and continues to rise quickly
4. There are now new repayment options: IBR, Payee, PSLF

The main point is current incoming medical students are faced with High tuition & High interest rates. Cost of education is considerably rising; and that is across the board for any degree.

 

[DrMidlife]

In addition to the above, there are very few med schools with cost of attendance that fits under the Stafford limit. That's a big change in the last 5 years. GradPlus loans, which are also federal, make up the difference, and that rate is 7.9%.

finaid.org is a good place to find comprehensive info. I suggest using finaid.org to make a "shopping list" of topics to research on studentloans.gov.

Best of luck to you.

 

[Silent Cool]

Hey all,

There's a lot of information about this scattered throughout the forums, and I'm finding it difficult to find a succinct summary of what is different with loans for medical students now than, say, 10 years ago. All I really know is that rates are higher at 6.8% now compared to around half that before. Anyone have any links to posts that have covered this, or good websites with this info? I feel like DrMidlife has posted very good info about this at some point but I haven't been able to find much.

I'm trying to find information to help me organize a discussion about this with other students with an emphasis on changes for students entering medical school now, and what may be different from what those now graduating residency dealt with.

Thanks for any help!

The actual rate will be about 7.4% for most people (combo of 6.8% and 7.9%). With a 400K principle, I'd say that matters over 20-30 years

 

[deleted307836]

Thanks everyone for the info and for pointing me to some great resources.

 

[sazerac]

Also refinancing is not an option anymore. You can find old posts (circa 2006) right here on SDN about people graduating and refinancing their loans at 2% or less.

There is little reason to ever pay back a loan at that low an interest rate, since inflation is usually more than that.

 

[Igor4sugry]

Here is official tuition database going back to 1996-1997 for private and public schools:
https://services.aamc.org/tsfreports/

Example: 2000-2001: Duke (resident): $30,795 (tuition & ins & fees)
Fast forward to 2012-2013: Duke (resident): $53,410 -> 73% increase.

 

[deleted307836]

Here is official tuition database going back to 1996-1997 for private and public schools:
https://services.aamc.org/tsfreports/

Example: 2000-2001: Duke (resident): $30,795 (tuition & ins & fees)
Fast forward to 2012-2013: Duke (resident): $53,410 -> 73% increase.

Thank you, this is really helpful. And sad.

 

[SilverCat]

Is there a reason tuition is increasing so much? One school finaid office basically told me to expect tuition to increase by 5% each year.

It feels like they're trying to put all doctors into perpetual interest slavery.

 

[TheWeeIceMan]

Is there a reason tuition is increasing so much? One school finaid office basically told me to expect tuition to increase by 5% each year.

It feels like they're trying to put all doctors into perpetual interest slavery.

The sad thing is, pretty much every school's tuition is skyrocketing. Doctors aren't the only ones getting screwed.

I honestly don't know what triggered this problem. Did student loans used to be dischargeable in bankruptcy? Was the government always in the student loan business? How are any of us entering school now supposed to pay for our kid's tuition when we have to shell out 500k and are already 6 figures in debt ourselves?

 

[Igor4sugry]

The sad thing is, pretty much every school's tuition is skyrocketing. Doctors aren't the only ones getting screwed.

I honestly don't know what triggered this problem. Did student loans used to be dischargeable in bankruptcy? Was the government always in the student loan business? How are any of us entering school now supposed to pay for our kid's tuition when we have to shell out 500k and are already 6 figures in debt ourselves?

1. If I'm not mistaken, there was a change in law in 1980s making student loans not dischargeable by bankruptcy.

2. The relatively recent changes was when government took over disbursement of loans, which before was done by private companies. This saved a little bit on fees.

3. What I cannot understand is why the US Congress set interest rates at 6.8% fixed as well as eliminate Subsidized Stafford loans. This is a time when tuition is at all time high amount and students are struggling to find work as well as their families.

4. Education is basically becoming a privilege; which has been happening in past 10yrs. There are multiple articles about increasing divide between high income and low income earners. Physicians will be able to send their kids to school; its those with family incomes <50k per year that may not any longer.

 

[Igor4sugry]

The sad thing is, pretty much every school's tuition is skyrocketing. Doctors aren't the only ones getting screwed.

Its a lot better to be a doc with 300k in debt than an english/sociology/anthropology etc. major with 100k in debt.

 

[Perrotfish]

Is there a reason tuition is increasing so much? One school finaid office basically told me to expect tuition to increase by 5% each year.

It feels like they're trying to put all doctors into perpetual interest slavery.

The minimum amount of money that any institution perceives that it needs will never be less than the maximum amount they can possibly get. The government is giving away an essentially infinite amount of money to teenagers for education without any underwriting, and schools are figuring out a way to match their financial demand to the government's supply.

 

[PAYE1]

The minimum amount of money that any institution perceives that it needs will never be less than the maximum amount they can possibly get. The government is giving away an essentially infinite amount of money to teenagers for education without any underwriting, and schools are figuring out a way to match their financial demand to the government's supply.

This is exactly right, but with PAYE and now the imminent removal of the tax bomb, we will increasingly be seeing a massive transfer of wealth from taxpayers -> educational institutions as opposed to naive 22-year-olds -> educational institutions.

To have any hope of a functional system, the government needs to get out of the student loan business and make loans dischargeable in bankruptcy. Failing that, the government should at least do something to police the tuition an institution can charge relative to the true cost of attendance or to the expected value of the degree.

 

[Igor4sugry]

Here is official tuition database going back to 1996-1997 for private and public schools:
https://services.aamc.org/tsfreports/

Example: 2000-2001: Duke (resident): $30,795 (tuition & ins & fees)
Fast forward to 2012-2013: Duke (resident): $53,410 -> 73% increase.

UPDATE: Here is 2012-2013 tuition for DO schools:
http://www.do-online.org/TheDO/?page_id=104851

 

[DrMidlife]

Here's an overview of the changes that various parties are going after: http://www.motherjones.com/politics/2013/05/student-loan-interest-rate-plan-obama-republican-warren

Edit: I don't personally believe any of these will pass. I expect some late hail mary will keep undergrad rates at 3.4.

 

[The White Coat Investor]

To have any hope of a functional system, the government needs to get out of the student loan business and make loans dischargeable in bankruptcy. .

You say you don't like 6.8%. You'd like to see 15% or so? Making a loan dischargeable in bankruptcy might not be a good idea. It's already unsecured. Most unsecured loans to people with enough income to pay them back are in the double digit interest rates. They aren't made at all to people without an income.